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The influence of financial behavior on capital market investment decision making with mediating of financial literacy in Yogyakarta

Author

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  • Rahmat Hidayat

    (Islamic University of Indonesia)

  • Abdul Moin

    (Islamic University of Indonesia)

Abstract

The growth of capital market investors and financial literacy has increased every year and investors in making an investment decision However, financial theory argues that there are psychological biases that can influence investors in making inappropriate investment decisions. This study aims to examine the influence and analyze Overconfidence, Loss Aversion and Herding Bias on investment decisions and Financial Literacy as a mediating variable. Financial Literacy is used as mediating variable in the relationship of Overconfidence, Loss Aversion. However Herding Bias variables on Investment Decisions. This study uses non-probability sampling techniques to as many as 163 investors stock in Yogyakarta as respondents. Findings/Results: the study shows that overconfidence, loss aversion and herding bias have a significant effect on investment decisions and overconfidence, loss aversion and herding bias are not mediated by financial literacy in making investment decisions Key Words:Overconfidence, Loss aversion, Herding bias, Financial literacy, Investment decisions

Suggested Citation

  • Rahmat Hidayat & Abdul Moin, 2023. "The influence of financial behavior on capital market investment decision making with mediating of financial literacy in Yogyakarta," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(8), pages 227-237, November.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:8:p:227-237
    DOI: 10.20525/ijrbs.v12i8.2974
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    References listed on IDEAS

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    2. Bertella, Mario A. & Silva, Jonathas N. & Stanley, H. Eugene, 2020. "Loss aversion, overconfidence and their effects on a virtual stock exchange," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 554(C).
    3. Annamaria Lusardi, 2019. "Financial literacy and the need for financial education: evidence and implications," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 155(1), pages 1-8, December.
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